Market report records jump in IT freelancer demand

The Recruitment and Employment Confederation's Report on Jobs recorded a jump in demand for IT freelancers last month. However, REC has warned the rise may be a 'blip.'

For the first time in six months the 'IT & Computing' contracting sector category rose from eighth place (in eight sectors), to sixth place, overtaking the 'Executive/Professional' and 'Nursing/Medical/Care' sectors.

IT contracting rose 3.8 index points, up from 39.4 last month to 43.2 this month. Last October, the freelance IT sector trailed in last place, with an index rating of 36.4. (Note: See comment box below for an explanation of how index numbers work.)

Dan Guthrie, REC's press officer, issued the following statement: "The apparent jump in statistics is not particularly good news. A similar rise in May was met the next month with a drop back down to last place again. Decline within the IT contract market is still falling, but what the figures show is that this rate of decline is moderating slightly. If the contract IT sector stays out of bottom place next month or in three months' time then it will mean things are not quite as bad as they were."

The report showed average weekly billings from contract workers to have risen for a tenth successive month in October, and at the strongest rate of growth since July. Agencies reported the increase reflected robust growth of demand for workers at the lower end of the labour market.

"Indexes of demand for staff vary between 0 and 100 with a reading of exactly 50.0 signalling no change on the previous month. Readings above 50.0 signal an increase or improvement; readings below 50.0 signal a decline or deterioration" - Richard Harding, statistician for NTC Research which provides REC's figures, explains how the index measurements work

Availability of contract workers increased for the eighteenth month running in October. Nevertheless, despite continuing to rise strongly, the rate of improvement was slower than that seen in both the previous two months. Furthermore, with certain key skills again reported by recruitment agencies as being in short supply, shortages of suitably qualified staff remained.

The number of people placed in permanent jobs by agencies increased for the eighth month running in October, with higher volumes of placements generally reflecting a marginal expansion of demand for staff. However, despite picking up slightly, the rate of growth was again modest as clients remained cautious when hiring new employees in the midst of ongoing economic uncertainty.

Availability of permanent staff rose for the seventeenth consecutive month in October, with the rate of improvement picking up to a level close to the eight-month high seen in August.

Demand for permanent IT staff fell sharply for the fourth consecutive month.

No skill sets were reported to be in shortage in either the permanent or contract IT sectors.

A freak 'blip' of recovery or the beginning of things to come?

Brett Walsh, Head of UK Human Capital at Deloitte & Touche, said: "Although an upturn in demand for staff was recorded in October, much of the increase was in fact driven by increased public sector demand for permanent staff, notably in healthcare. Private sector employment on the other hand continued to fall - especially at the executive level where employers clearly remain cautious with regard to recruiting and many firms continued to reduce headcounts to cut costs in the uncertain economic environment."

Tim Nicholson, Chief Executive at REC, said: "Since early this year there has been modest but welcome growth in permanent placements and temporary staff billings, and now October shows a slow down in the rate of decline of agencies' margins. However, the labour market remains fragile, with regulatory pressures and an increase in employers NIC to come."

According to jobstats.co.uk, the latest average IT rates are: £19 per hour for freelance workers and £36,000 per annum for employees.

The five most popular skills are:

Management 32.8 per cent - £23 per hour, £40,500 per annum

Support 24.9 per cent - £14 per hour, £31,900 per annum

Analyst 18.4 per cent - £20 per hour, £34,900 per annum

Design 17.2 per cent - £28 per hour, £39,000 per annum

Finance 16.5 per cent - £28 per hour, £45,600 per annum

The five most popular locations are:

London 27.6 per cent - £21 per hour, £43,200 per annum

City 5.9 per cent - £29 per hour, £49,500 per annum

Berkshire 4.5 per cent - £19 per hour, £38,800 per annum

Surrey 4.1 per cent - £17 per hour, £36,800 per annum

South East 3.4 per cent - £30 per hour, £38,500 per annum

(Note: Hourly rates refer to freelancers, annual figures to permanent workers)